What are the financial statements of a company primarily based on?

Recorded facts, accounting principles, and personal judgments

Financial statements are essential reports prepared by organizations to present a periodic review of their progress. These statements provide crucial insights into the financial position as of a specific date and the financial performance over a defined period. The American Institute of Certified Public Accountants defines financial statements as a combination of recorded facts, accounting principles, and personal judgments. These statements are based on chronologically recorded events expressed in monetary terms. They serve as a comprehensive record of the business's investments and the results achieved during the reviewed period. Financial statements offer a snapshot of the company's health, blending objective data with accounting principles and managerial assessments.